Why One Democrat Is So Over Obama's Climate Regulations

Climate hawk Sheldon Whitehouse thinks a carbon fee is the best bet.

Sheldon Whitehouse has given 79 Senate floor speeches about the dangers of climate change, and he's among the Senate's strongest supporters of the Obama administration's Environmental Protection Agency cracking down on carbon pollution.

But in his 80th floor speech on climate Tuesday, the Rhode Island Democrat said he had a better idea: A per-ton fee on large carbon polluters, he said, would be "much more efficient and predictable than complex regulations," while also raising revenue that could be returned to taxpayers.

"A well-designed carbon fee would also open a conversation about whether carbon regulations are still needed," Whitehouse said.

Along with Hawaii Democrat Brian Schatz, Whitehouse on Tuesday introduced a bill that would impose a per-ton fee on carbon for large polluters, which he says could raise as much as $2 trillion in revenue over 10 years. In line with the Obama administration's estimate of the "social cost of carbon," the fee would start at $42 a ton with an inflation-adjusted 2 percent increase a year.

That money would be returned to taxpayers, although the bill doesn't specify a payment plan. Among the options were breaks on corporate or income taxes, infrastructure investments, and assistance to low-income families with high energy costs.

Speaking to reporters, Whitehouse made it clear that he's not looking to replace the Obama administration's regulations on greenhouse-gas emissions from power plants—at least not yet.

"It is a fact that an adequate and well-enforced carbon fee will have an effect that is very corollary to what a regulatory regime would do," Whitehouse said. "I don't think that [green groups] or anybody else is married to a regulatory regime; what they want is the result. At the moment, they see this as the only way to the results, and at the moment it is."

A carbon price is seen as a possible environmental solution that could bring together free-market proponents on the right with greens on the left, since it encourages corporations and institutions to find the cheapest and most effective emissions-reduction plan for themselves. Many companies have even been building an internal carbon price into their own financial plans.

In the conservative Weekly Standard last week, R Street Institute President Eli Lehrer reiterated his support for the carbon fee as "better than regulation," and said it could break the logjam on energy policy. Lehrer backed it as a possible path forward for Republicans, provided it was part of a deal where the Left gave up "new revenue, new regulations, and new resource-development restrictions."

Rachel Cleetus, senior climate economist at the Union of Concerned Scientists, said it was premature to talk about a carbon fee supplanting regulations, but she pointed out that the EPA rules actually allow states to create cap-and-trade systems to meet the standards. She said the two policies can be "perfectly complementary," especially if regulations are built with stability in mind.

"The cost of pollution has been passed onto American citizens, and this is an opportunity to make sure those costs are being taken into account as we're making long-term investments," Cleetus said. "It's a market-friendly tool; it's one that best serves innovators."

Whitehouse's bill wouldn't preempt the EPA standards, and he emphasized that he doesn't support any replacement unless it is clear there would be no gap in the climate benefits. In fact, Whitehouse was one of several liberals who questioned support for the 2010 Senate climate bill when a draft revealed language that would have stripped some greenhouse-gas-emissions authority from states and EPA.

The bill is a long shot to attract broad GOP support, but Whitehouse is professing optimism. He said he deliberately introduced the measure in the lame-duck session with just a single cosponsor in order to start the conversation and try to attract some sympathetic Republicans. Previous attempts at a carbon fee—including one from Sens. Barbara Boxer and Bernie Sanders—have not gained much traction.